India fines jewellery firm for withholding information in $2 bln bank fraud

Gitanjali Gems

27/02/2020 14:16

BENGALURU, Feb 27 (Reuters) - India's securities regulator
on Thursday fined jewellery retailer Gitanjali Gems Ltd
 GTGM.NS  and its executives 50 million rupees ($695,700) for
failing to disclose key information related to a $2 billion
fraud at Punjab National Bank (PNB)  PNBK.NS .
    Gitanjali's promoter and managing director, Mehul Choksi;
his nephew, billionaire jeweller Nirav Modi, and others were
accused of being involved in fraudulent transactions that led to
losses of roughly $2 billion for PNB.
    PNB, India's second-biggest state-run bank, in 2018 alleged
that a few rogue employees had issued fake bank guarantees over
several years to help jewellery groups - controlled by Modi and
Choksi - raise funds in foreign credit. Both have denied any
wrongdoing.
    Gitanjali failed to properly disclose the withdrawal of the
credit limit by PNB, actions by various enforcement agencies
relating to the case and the resignation of key executives, the
Securities and Exchange Board of India (SEBI) said in an order.
    Choksi and the company's executive director, Dhanesh Sheth,
were also fined by the regulator. 
    "The deliberate defiance of the mandatory obligations and
hiding the crucial and material information from investors,
regulators and Stock Exchange, as found in this case should be
dealt with sternly," the SEBI said.
    The regulator also said that Gitanjali Gems failed to make
proper disclosures about defaulting on bond payments owed to
state-run Life Insurance Corp, India's largest insurer.
    Modi was arrested in London in March last year and is
currently fighting extradition to India, while Choksi, according
to reports, is residing in the Caribbean nation of Antigua and
Barbuda.
    ($1 = 71.8700 Indian rupees)

 (Reporting by Sachin Ravikumar; Additional reporting by Abhirup
Roy; Editing by Anil D'Silva)
 ((saisachin.r@tr.com; +91 80 6182 2754; Twitter: @sachinr27;))